The Employment Standards Act post-Ontario election, 2018

August 28, 2018

It is important for employers to consider the potentially significant changes that may be in store for Ontario’s Employment Standards Act (“ESA”) given the June 29, 2018 change to a new Conservative provincial government.

The following is a recap of the recently implemented and future ESA changes made by the former Liberal government and expected next steps for the new Ontario government:

Minimum Wage

Minimum wage increased as of January 1, 2018 to $14 per hour for most workers, with exceptions for gratuity-receiving liquor-serving staff ($12.20 per hour), homeworkers ($15.40 per hour) and students working less than 28 hours per week or during a school holiday ($13.15 per hour). This is expected to remain in place after June 29, 2018;

At this time, it is anticipated that the incoming Conservative government is unlikely to proceed with the further minimum wage increases scheduled for January 1, 2019, which would have made the new hourly minimums as follows: most workers $15; gratuity-receiving liquor-serving staff $13.05; homeworkers $16.50 and students $14.10. It is further anticipated that the new government may eliminate the annual inflation increase to minimum wage that was scheduled to come into effect in 2019.

Vacation with Pay

As of January 1, 2018, the ESA was amended to provide three (3) weeks’ minimum paid vacation entitlement for employees after five years or more employment with the same employer. From the employer’s perspective, this was a significant increase in paid vacation from the previous statutory maximum of two (2) weeks of paid vacation. It is unknown if the Conservative government will revert back to two (2) weeks statutory maximum, but this change is conceivable given the significant cost impact on small to medium size businesses in particular.

Changes to Overtime Pay

The Overtime Pay section of the ESA was modified as of January 1, 2018 to establish a new rule for employees who have two or more regular rates for work performed for the same employer. This provision has proven to be an administrative burden on employers and we would not be surprised to see the overtime pay rules streamlined or simplified under the new government.

Holiday Pay

As of January 1, 2018, the ESA was amended to change the calculation of public holiday pay to be based on the number of days actually worked in the pay period immediately preceding the public holiday, which sought to lead to more pay for employees working only a few days per week. Following a strong outcry from employers, the Liberal government backtracked on the changes in early May, reverting to the former calculations based on taking the amount the employee had earned in the four weeks before the work week in which the statutory holiday occurred, and dividing that figure by 20. It is expected that the new Conservative government will maintain the former public holiday pay calculations formula.

Independent Contractors

As of November 27, 2017, Section 5.1 of the ESA reversed the onus on proving employment status from the employee to the employer when the employer claimed that the worker was actually an independent contractor. The determination of employee vs. independent contractor matters in terms of the application of the rules of the ESA itself, source deductions, etc. It is uncertain whether the new Ford government will change this onus back to the worker to prove that they were an employee of the employer. As a reminder to employers, make sure you get the worker to sign a well-drafted independent contractor agreement before they start working with you to avoid the unpleasant surprise of retroactive penalties and charges related to source deductions or back pay that you may be found to owe in the event the worker is determined to be an employee.

Equal Pay for Equal Work

As of April 1, 2018, the Equal Pay for Equal Work provisions in the ESA were amended to require employers to pay the same wage rates to seasonal, part-time or temporary workers as those of full-time workers performing substantially the same work for the same employer, with relatively limited exceptions. It is not known if the new government will alter these provisions.

Leaves of Absence

The Liberal government made numerous changes to existing leaves of absence, including to pregnancy, family medical and domestic/sexual violence leave. The most widespread change was to Section 50 (Personal Emergency Leave), which now provides personal emergency leave to all employees, not just to employees of large employers (50+ employees). Employees also have the right to two paid days of personal emergency leave, as well as the unpaid days previously provided. Employers also cannot require a doctor’s note to justify the employee’s use of the personal emergency leave days. It is conceivable that the new government may eliminate the paid aspect of the personal emergency leave days.

Scheduling Issues

Some of the most contentious changes to the ESA relate to scheduling, which changes were anticipated to come into effect on January 1, 2019. As currently envisioned, employees would be given the right to request changes to their schedule or work location and employers would be bound to discuss such changes with the employee and either grant or deny with reasons for the denial. Further, the scheduling changes would put into place a minimum of three hours of wages for shifts under three hours in duration, a minimum pay for being on call, the entitlement to pay for three hours wages in the event of shift cancellation with less than 48 hours’ notice and a right for employees to refuse requests to work on a day that they were not scheduled to work if the request was made with less than 96 hours’ notice. From the employer’s perspective, the most onerous change would be the new requirement to keep formal records of the dates and times that employees were scheduled to work or be on call and any changes made to that schedule. It is expected that the new government will likely revoke the changes to the scheduling provisions in the ESA, given the significantly higher administrative and payroll burden that they pose for small to medium-sized businesses in Ontario.

It is expected that the Conservative government will move quickly on making changes to the ESA. If you have any questions about the changes to the ESA, please do not hesitate to contact us. We would be pleased to discuss how the new rules affect your business, our predictions on potential changes to come, and any other questions you may have regarding the above or any other matter. Pallett Valo LLP will keep our clients apprised of further changes or modifications as they occur.